Australian Dollar: USD/AUD (AUD=X) releases GDP and the RBA is expected to cut rates to 1.25%

Australian Dollar: USD/AUD (AUD=X) releases GDP and the RBA is expected to cut rates to 1.25%

Australian Dollar: USD/AUD (AUD=X) releases GDP and the RBA is expected to cut rates to 1.25%

AUD/USD has moved higher in the Monday session. In North American trade, AUD/USD is trading at 0.6957, up 0.30% on the day. Earlier in the day, the pair touched 0.6966, its highest level since mid-May. On the release front, Australian Company Operating Profits climbed 1.7% in the first quarter, but fell short of the estimate of 2.9%. The MI inflation gauge slowed to 0.0%, down from 0.2% in the previous release. In the U.S., ISM Manufacturing PMI dropped to 52.1, short of the estimate of 53.0. On Tuesday, Australia releases GDP and the RBA is expected to cut rates to 1.25%. Traders should be prepared for some movement from AUD/USD following these key releases.

The RBA has maintained rates at 1.50%, despite the weaker Australian economy, which has been hurt by the slowdown gripping the Chinese economy. Critics would argue that the bank has been in denial, as bank members have sounded dovish about the economy but haven’t lowered rates in order to stimulate growth. However, the RBA is expected to cut rates to 1.25% at the upcoming meeting. If the rate statement or comments from RBA Governor Lowe are dovish, the Aussie could lose ground.

The U.S. economy continues to perform well, with first-quarter growth above the 3% level. Second estimate GDP posted a gain of 3.1%, matching the estimate. This was just shy of the initial estimate in April, which came in at 3.1%. The U.S. economy is firing on all cylinders, despite the nasty trade war with China, which has escalated in recent weeks. U.S. officials, including President Trump, had announced that substantial progress had been made, and it seemed that a trade deal was just around the corner. However, Trump shocked the markets by slapping further tariffs on China, which led to counter-tariffs against U.S. products. China has reacted angrily to U.S. trade sanctions on Huawei, a giant Chinese telecom company. The euro has managed to weather the latest crisis in the U.S.-China trade war, but if there is no improvement, higher risk apprehension could make the Aussie less attractive to investors.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 0.71.

The projected lower bound is: 0.69.

The projected closing price is: 0.70.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 91.8182. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 10 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 53.03. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 11 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 207.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 8 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.

Rex Takasugi – TD Profile

FOREX AUD= closed unchanged at 0.698. Volume was 97% below average (consolidating) and Bollinger Bands were 19% narrower than normal.

Open High Low Close Volume___
0.697 0.698 0.697 0.698 2,971

Technical Outlook
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 0.69 0.70 0.71
Volatility: 4 8 10
Volume: 79,630 90,783 104,845

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX AUD= is currently 2.1% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of AUD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on AUD= and have had this outlook for the last 28 periods.

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